Negotiable Instruments Act

			Negotiable Instruments Act
4		Promissory Note
5		Bill of Exchange
6		Cheque
7
8		Holder
9		Holder In Due Course
10		Payment in Due Course
16		Endorsement in Blank / Full
26		Minor may draw, endorse, deliver and negotiate a N.I. so minor can draw a
		cheque. No Overdraft / LOAN can be given to the banker
31		Liability of the Paying Bank
50		Restrictive Endorsement
52		Conditional Endorsement
52		Sans Recourse
85		Cheque Payable to Order : Paying Bankers' Protection
87		Material Alternation
89		Payment according to apparent tenor thereof at the time of payment and
		otherwise in due course, shall discharge the person/banker from all liability
		thereon.
123		General Crossing
124		Special Crossing
125		Crossing of Cheque
130		Not Negotiable Crossing
131		Protection to Banker While collecting cheques
138		Drawer of cheque is liable to be punished if the cheque is bounced for
		Insufficiency funds, the drawer is punishable with and imprisonment which
		may extend to one year and or a fine may extend to twice the amount of the
		cheque or with both.
141		Offences By Company
143		Summary Trial by Court
144		Mode Of Service of Summons
145		Evidence On Affidavit
146		BANKS' SLIP Prima facie evidence
147		Offences to be Compoundable
10/31/		Payment Of Cheques
85/126
126 to		Payment in Due Course of Cross Cheques
129
131A		Protection to Banker While collecting Drafts
85A		Draft Payable to Order : Paying Bankers' Protection
85A		Drafts Payable to Order

Banking Regulation Act 1949

Banking Regulation Act 1949
The BR Act does not apply to Primary Agricultural Credit Societies
Section
4 & 53 The Govt. has power to suspend operations BR Act / give exemptions from any of
the provisions of the Act on the recommendations of the RBI.
5(a) Approved Securities: In which a trustee may invest money under section 20 of
the Indian trusts act, 1882
5(b)
Banking is defined as the acceptance of deposits of money from the public for the
purpose of lending or investment
5©
A banking company, is a company which transacts business of banking
May be constituted under section 3 of companies Act
Section 51 of Companies act – foreign company
6
Govt. has also power to notify the other forms of Business permissible apart from
banking business. Section 6(1)(0)
Discounting of bills, Collection of cheque and bills. Remittances, safe custody of
articles, safe custody of articles, hiring safe custody of articles, conducting
foreign exchange transactions, conducting (Central/State) government
transactions.
7
Every banking company has to use word bank as part of its name, no other
company can use the word bank, banker, banking as part of its name.
7(1) Prohibits use of words ‘Banker’ or ‘Banking’ or ‘Banking Company’ by a company
other than Banking Company.
7(2) Prohibits use of such words by individual or group of individuals or a firm.
8 Prohibited Business
9 No banking company shall hold any immoveable property howsoever acquired,
except for its own use, for any period exceeding Seven years
10 No Banking company shall be managed by Managing Agent
10A
(28) Board Of Directors: Qualifications for directors of banking companies. At
least 51% of the total number of directors shall be persons who have expertise in
accountancy, agriculture and rural economy, banking, cooperation, economics,
finance, law etc.
Max. period of office for Chairman, Ordinary Director in a banking company is 8
years
If Chairman is removed by the order, he has to apply to Central Govt within 30
days.
10B (29) Whole Time Director / Managing Director
11
If a foreign bank wishes to carry on business in India the aggregate value of
PaidUp share capital and reserves shall not be less than
at a place other than Bombay /Kolkatta Rs. 15 lakh
in Bombay / Kolkatta or both Rs. 20 lakh
An amount of 20% of the profit for each year has to be deposited with RBI.
11(3)(i): The aggregate value of paid-up capital and reserves a banking

company incorporated in India and having place in more than one state
but not in Bombay / Kolkatta Rs. 5 lakhs
and in Bombay / Kolkatta Rs. 10 lakhs
12
The minimum ratio between authorised, Subscribed, and paid-up capital of a
banking company should be: 4 : 2 : 1
12(2)
No person holding shares in a banking company shall exercise voting rights on
poll in excess of 10% of the total voting rights of all shareholders of the banking
company
12A(1)
RBI may ask a banking company to : call a general meeting of shareholders and
elect fresh directors.
13
Prohibits banks from making payment of commission, brokerage, discount or
remuneration on any shares issued by it in excess of 2.5% of the paid-up value of
such shares.
14A(1)
Prohibits a banking company from creating floating charge on the undertaking or
any property of the company or any part thereof.
15
Prohibits a banking company from paying any dividend on its shares until all its
capitalized expenses have been completely written off
16 Prohibits a person to be appointed as director of more than one banking company
17
Reserve Fund(53)
Every banking company incorporated in India is required to transfer each year to a
reserve fund a sum equivalent to not less than 20% of profit before dividend
18
Every banking company not being scheduled bank, cash reserve need not be
maintained with the Reserve Bank. It may be with bank itself, or in current account
with the Reserve Bank.
The balance maintained should not be less than 30% of the demand and time
liabilities as on the last Friday of the 2nd Fort Night.
Return of Cash Reserve of Non-scheduled Banks
19(1)
Approval of Central Govt. is required for formation a subsidiary for the purpose
 carrying on business of banking exclusively outside India
 effecting, insuring, guaranteeing, underwriting, participating in managing and
carrying out of any issue, public or private
 undertaking and executing trusts
19(2)
No banking company shall hold shares in any company, whether as pledge,
mortgagee or absolute owner of an amount exceeding 20% of the paid-up share
capital of that company or 30% of its own paid-up share capital and reserves,
whichever less.
20(1)
Banking Company is prohibited from granting any loan or advance against the
security of its own shares.
20A(1)
Banking Company shall not, except with the prior approval of the RBI, remit in
whole or in part any debt due to it by
any of its directors
any firm or company in which any of its directors is interested
21 Empowers RBI to control advances by banking companies
21A Transaction between a banking company and its debtor cannot be reopened by

any court on the ground that rate of interest charged is excessive.
22(1) Licence from RBI required
22(3) Adequacy of Capital Structure and earning prospectus
23(b) Permission to open office outside India from RBI
23(1) Permission for change of premised within the same city, town or village not
required

RBI Act, 1934

	RBI Act, 1934
	Reserve Bank of India, 1934
Section	Description
3	The reserve Bank was constituted for taking over management of
	currency from central govt,
3(2)	Body corporate having perpetual succession and a common seal
4	Capital of RBI is Rs.5 crore
7(1)	The Govt. has Power to Issue Directions to the RBI in public
	interest after consultation with the Governor.
7(2)	general superintendence and direction of the affairs and business
	of the RBI to Central Govt.
8	RBI is headed by Governor
8(a)	Govt can appoint 4 Deputy Governors for RBI
8(2)	Govt. may appoint a Deputy Governor of RBI as Chairman of
	NABARD
17	Businesses which the Reserve Bank may transact
17(1)	Reserve Bank is authorised to accept on money on deposit from
	the Central/State Govt. local authorities, banks Without Interest
	No interest on deposit accounts of Cental and State Govt.
17(4)	Reserve Bank is authorised to grant loans and advances to any
	scheduled bank, cooperative banks, SFC's repayable on deman
	or on expiry of fixed periods not exceeding 180 days
17(4)	against the security of stocks, funds and trustee securities, gold or
	silver or documents of title to the same, such bills of exchange
	and promissory notes

17(5)		Loans  and  advances  to  Central  and  State  Govt.  which  are
		repayable not later than 3 months.
19		RBI has been prohibited making loans and advances, drawing
		and accepting bills payable otherwise than on demand, engage in
		trade  or  otherwise  have  a  direct  interest  in  any  commercial,
		industrial, or other undertaking
20		Requires the Reserve Bank to undertake to :
20		Accept monies,make payments, carry out exchange, remittance
		and other banking operations of the Central Govt.
20,21,21A		Reserve Bank manags the public debt and issues new loans on
		behalf of the Central and State Govt. Banker to Govt.
22		Sole right to issue bank notes
23		Issue Dept : Issue of bank notes
23		The assets of Issue Dept of Reserve Bank shall not be subject to
		any liability other than the liabilities of the Issue Dept.
24		Prohibits  issuance  of  bank  notes  by  Reserve  Bank  for
		denomination exceeding Rs.10,000
25		The design, form and materialof  bank  notes is approved by
		Central Govt
27		Prohibits the Reserve Bank from reissuing bank notes which are
		torn, defaced or excessively soiled
29		No Stamp Duty is payable on the bank  notes  issued by the
		Reserve Bank
31		Banks are Prohibited from issuing Demand Drafts payable to
		bearer
33		Assets of Issue Department : Gold Coin, Gold Bullion, foreign
		securities and rupee securities
42(1)		Every scheduled bank has to maintain cash reserve with reserve
		banks: Average daily balance of 3% total of demand and time
		liabilities
42(2)		Every Scheduled Bank shall submit to Reserve Bank a return at
		the close of each alternate Friday showing its demand and time
		liabilities, cash in hand and with other banks, investments etc.
42(6)		Inclusion in and Exclusion from the Second Schedule of a bank
45		Collects credit information from banks
45		calls for returns containing credit information from banks
45-IA		NBFC:obtain a certificate of registration from Reserve Bank
45-IA		NBFC:shall have net owned fund of RS.25 lakhs or such sum not
		exceeding Rs. 200 lakhs
49		Bank Rate is defined